Getting in Shape for 2008


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This is the time of year when health-club memberships soar. During the post-Christmas and New Year holidays unfit, over-weight business executives determine that they are going to shed those pounds and get in shape for the coming year. But what about the companies they run? How often do executives stand back and take a critical look at how they are running their business? This is our guide to setting some new-years resolutions and getting your business in shape for the new financial year.

1. Start with the big picture

Annual plans always include goals and objectives for the year but how often do they start with a review or restatement of the company purpose? Increasing market share may be desirable but will it make a difference? Opening up operations in a new geography may be an important objective but without answering the basic question “Why are we in business?” it is simply a tactic. The best organisations set their sights higher and determine a business purpose or brand promise that encapsulates the difference they want to make. Krispy Kreme the US doughnut retailer promises, ‘To create Magic Moments’. Harley-Davidson’s purpose is to ‘Fulfil dreams’. Microsoft recently updated its mission thus; ‘To enable people and businesses throughout the world to realize their full potential’. Goals may articulate the work that your people need do but it is meaning that motivates them to do it. Tim Waterstone, founder of Waterstone’s bookstores and the Daisy and Tom Department stores says, “People follow a dream not a business plan”.

So if your company has a purpose or promise start the year by restating its importance to your people. Insist that your managers set their goals and objectives by showing how these will impact the achievement of your company purpose. If your company does not have one, start worrying!

2. Engage with your most profitable customers
The new year is also the season for sending gifts and cards to our best customers. Yet for many organisations for ‘best’ read ‘biggest’. These large accounts, whilst important, are often less profitable due to discounts, marketing support and the like. Few organisations focus on those customers who are truly most profitable; those who buy across multiple channels without the company realising their worth, those who pay the full sticker price or maybe even a premium, those who keep coming back and, most importantly, refer others just like themselves. For most businesses 80% of the profits come from 20% of the customer base and yet these customers are often ignored. In fact in some cases these loyal customers receive worse treatment than new customers. Many banks, insurance companies and mobile phone companies have a policy of offering better deals to prospective customers in an attempt to woo them than they do to existing customers in the naïve belief that these customers are ‘locked in’.

So find out who these most profitable customers are and speak to them. (And no, I don’t mean ask your research company to run a focus group!) Find out what they think of you, how they feel about your brand. Identify how the experience you create for your customers can be enhanced and set out to implement it.

Joe Tucci, CEO of EMC² the information storage company, did just this when sales declined in the first quarter of 2001. As a result of what he learnt he swiftly restructured the company and avoided the worst effects of the dot.bomb crash that sank so many high-tech companies.

3. Engage with your people

Margaret Thatcher was one of the U.K’s greatest prime ministers. Yet in her third term she was thrown out. Why? – Because she surrounded herself with ‘yes’ men and refused to listen to dissent. In fact she coined the pejorative term ‘wets’ to describe her critics and banished them from her government. As a result she lost touch with reality, the mood of the people and, finally, her job. Executives do this too. The more powerful and successful the CEO or President the more vulnerable they are to being fed good news. As time goes by the senior person surrounds him or herself with their own hires who are often just like them. Eventually the senior team starts thinking and acting as one even in the face of data to the contrary.

So analyse your diary, you will probably find that you spend most of your time with the people you like-your most trusted lieutenants, and least with those whom you find challenging or disagreeable, talented though they may be. Resolve to spend more time with your critics and the front-line employees. Ask them to tell you their opinions without pulling any punches. You don’t have to agree with them but you do need to hear them. Gordon Ramsay, the award winning chef, told the European Customer Management Conference a couple of years ago that he gathered 35 of his managers and sommeliers and asked them this question; “What pisses you off when you come to work?” He told us that the results were extraordinary and he found our exactly what he needed to do to improve the business.

4. Think the unthinkable

Ten years ago the major retail banks worried about losing a few points of market share to one another. Today supermarkets and the internet are the fastest growing channels for retail financial services. Five years ago mighty carriers like British Airways, TWA and Swissair ruled the skies. Today some famous brands have disappeared; others like BA are going through major transformations in order to compete against the highly profitable new carriers that have sprung up. Airlines like Jet Blue, Virgin and Ryan Air are rewriting the rules and economics of the airline business. Who will rewrite the rules in your industry? For sure it won’t be a current competitor. It is much more likely to be a brand that hasn’t even been thought of yet.

So think the unthinkable. What would Richard Branson or Jeff Bezos do if he entered your industry? Resolve to reinvent your business before someone else does. Lou Gerstner did exactly that at IBM transforming the company from a hardware manufacturer to an IT services provider and in the process made ‘Big Blue’ even more successful.

5. Get your organisation fit for the future

It will not have escaped your notice that the fastest growing economies are China and India. They are each recording GNP growth rates of 7% or 8% and are likely to continue doing so. In fact their economies are predicted to overtake the US by 2050. Part of this growth is being fuelled by the migration of manufacturing to China, and outsourcing of white-collar jobs to call centres and software houses in Bangalore. Even some basic accountancy and legal services are being outsourced to lower cost countries. So what is the answer? Trade embargoes? Protests? Strikes? None of these is likely to work. In fact the migration of lower skilled jobs need not be a problem if companies focus on building their brands, developing new products and increasing value for customers. Companies like Nike are now producing win-win outcomes by creating lower skilled jobs in developing countries whilst keeping the higher-value management, marketing and product design jobs in their home markets. There will always be a role for organisations that can spot gaps in the market, develop new products to fill them and train and develop their people to increase the value they create. Upgrading the skills and talents of your people and increasing value for customers is the only true way to sustain your company. By doing this it is estimated that the US imports two or three times as many jobs as it exports and these are the more skilled, higher-paying jobs.

So resolve to identify how the needs of your customers are changing and determine how you can improve your competitive offer through innovation. Upgrade the skills of your people and focus them on increasing value for your customers whilst outsourcing back-of-house, lower skilled jobs to stay cost-competitive. Treat training as a R&D expense and place the training and development of your people high on your agenda in 2008.

I started by talking about health-club memberships. Fitness centres earn most of their profits from the 80% of members who join, attend two or three times and then lose interest. If any of the points I have made in this article have resonated with you do something about it. Schedule a meeting with your team to discuss these issues and build them into your plans for the year. Then, and most importantly, review progress regularly, not just in the first quarter.

If you would like to know more about these ideas order a copy of our book, See, Feel, Think, Do-the power of instinct in business from or our web site

Shaun Smith

Copyright Shaun Smith + Co. 2008

See, Feel, Think, Do-the power of instinct in business
Shaun Smith and Andy Milligan.
Cyan books January 2006.
ISBN 1904879551

Shaun Smith
Shaun Smith is the founder of Smith+Co the leading UK based Customer Experience consultancy. Shaun speaks and consults internationally on the subject of the brand purpose and customer experience. Shaun's latest book 'On Purpose- delivering a branded customer experience people love' was co-written with Andy Milligan.


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